China coal December 2021 outlook to 2050

The 300 Mtpa of additional capacity approved in October has prevented the QHD price from surging above RMB2,500/t. We believe the government's intervention will ensure stability in the coal industry. As a result, we forecast the QHD price to range around RMB700/t in the near term. China’s aim to achieve carbon neutrality will be the main driver of the coal market. We expect demand for thermal coal will fall significantly. However, we do not expect the coal price to slump below RMB500/t as the government will help to rationalise the industry. The domestic coking coal price soared above RMB4,000/t in September. However, we still expect metallurgical coal demand to plateau in 2021 before falling for the rest of our forecast period. Accordingly, the domestic coking coal price will weaken. In the long run, from 2030, domestic coking coal supply shrinkage and cost increases will result in mild price recovery to RMB1,456/t in 2050. For more details, please read our report.